eNAPUS Legislative &

Political Bulletin
February 18, 2011 Volume 8, Number 3

House Subcommittee Explores Looming

Postal Crisis
The first hearing of the House Subcommittee on the Federal Workforce, the
U.S. Postal Service and Labor Policy confirmed the vast distance that postal
stakeholders need to travel to resolve the pension fiasco. On Wednesday,
freshman Subcommittee Chairman Dennis Ross (D-FL) convened his panel to
hear from a variety of postal players, including PMG Pat Donahoe and PRC
Chair Ruth Goldway. In addition, the GAO, NALC President Fred Rolando, and
two mailer representatives testified. Without exception, the witnesses identified
Chairmen Darrell pension overfunding and the overly-aggressive payment schedule, under which
Issa (R-CA) and the USPS must pre-fund its retiree health obligations, to be crippling. The
Dennis Ross (R-FL) points of departure occurred on what actions should be taken immediately.
Chairman Ross opened the hearing, expressing the belief that the current
postal crisis is linked primarily to digital diversion of first class mail and the
recession, and that mail volume and revenue will continue to decline. He also
acknowledged that without legislation, the Postal Service will be unable to
make its $5.5 billion Fiscal Year 2011 payment to prefund retiree health
benefits. The payment is due on September 30. (During questioning, PMG
Donahoe stated that the USPS would default on this payment, rather than
withhold employee or contractor compensation.) The Chairman expressed his
belief that short-term fiscal relief will not address systemic problems and
pending insolvency. Ross also suggested that employee attrition and early-outs
were inadequate to reduce the postal workforce; instead, he mused that the
USPS must cut its workforce and use other cost-cutting tactics. Full Committee
Chair Darrell Issa (R-CA) made an opening statement reflecting his view that
there is still a need for the USPS, but its mission may be more limited.
Subcommittee Ranking Democrat Stephen Lynch (D-MA) indicated that he
would introduce his legislation from last year that provides the USPS some
short-term fiscal relief, to buy time to explore a more comprehensive approach
to address the USPS problems. Rep. Gerald Connolly (D-VA) also indicated
that he planned to introduce legislation in the near future.
Rep. Connie Mack (R-FL) and the PMG had an engaging exchange. Mack
repetitively pressed Donahoe on whether he was asking for, or would ask for a
government “bailout.” The PMG repeatedly said, no. Furthermore Donahoe
stated that refunding the USPS surplus contributions did not involve any tax-
generated funds; every penny results from postal employee withholdings and
postage revenue. Another interesting colloquy occurred between Rep. Connolly
and the GAO representative. The GAO has yet to evaluate the magnitude of the
surplus. It appears that the GAO has weighed-in on virtually every postal
operation, yet has failed to evaluate pension overfunding. Ironically, the whole
pension issue started in the mid-1990s with the GAO.
 Showdown at the IG Corral
On Monday, the Inspector General (IG) of the Office of Personnel Management
(OPM) issued a study that challenged the conclusions of Postal Service IG
David Williams, regarding USPS’ pension overfunding and retiree health
liability. On both counts, the OPM IG argued that current OPM calculations are
acceptable, and that modifying these calculations could destabilize the Civil
Service Retirement Fund and the Federal Employees Health Benefits Fund.
Basically, the OPM IG is attempting to protect its own turf and the credibility of
OPM actuaries. Interestingly, the OPM IG did not contest the independent
USPS IG actuarial conclusions reached by Segal Group for the Postal Regulatory
David Williams Commission, which also found that the USPS has overfunded its pension
obligations and has an artificially inflated retiree health liability.

vs. At this week’s House Subcommittee hearing, Rep. Lynch identified OPM’s
historic fleecing of the Postal Service, through gross miscalculations.
Consequently, the OPM IG’s analysis should be suspect. For example, in 2002,
it was uncovered that OPM was overcharging the USPS by $78 billion for
retiree pensions. In 2003, OPM attempted to shift responsibility for $27 billion
in military obligations from the U.S. Treasury to the USPS. In 2009, it was
discovered that OPM was using an inflated health premium growth factor,
resulting in $13.2 billion in USPS overpayments, through 2016. And, in 2010, it
was disclosed that OPM’s formula for calculating CSRS obligations resulted in
overpayments totaling between $50 billion and $75 billion. Additionally, it was
uncovered that OPM miscalculated USPS’ future retiree health liability based on
OPM IG past postal employment numbers, rather than adjusting those numbers as
Patrick McFarland employment declined. Shockingly, the OPM IG argues that it is proper for the
USPS to subsidize the federal government’s own unfunded pension liability. Not
a very good track record for OPM accuracy and fairness!

Senator Daniel Akaka to Retiree

This week, Sen. Daniel Akaka (D-HI) announced that he would not seek re-
election, in November 2012. Senator Akaka was honored as NAPUS Champion,
at the 2004 NAPUS Leadership Conference. In addition, he has addressed
numerous NAPUS gatherings over his thirty-five year tenure on Capitol Hill.
Akaka was Senate author of the Postmasters Equity Act (Public Law 108-86).
In 2001, upon introducing the bill Sen. Akaka noted:
Our nation’s postmasters have helped fuel the infrastructure that
boosted performance ratings to an all-time high… They are on the
National Association of front line to ensure that our mail is delivered in a timely manner.
Postmasters of the U.S.
8 Herbert Street
Currently, Sen. Akaka chairs the Senate Subcommittee on Oversight of
Alexandria, VA 22305 Government Management, the Federal Workforce and the District of Columbia,
and serves on the postal subcommittee. Moreover, Sen. Akaka is the third-
Tel. 703-683-9027
Fax. 703-683-0923 ranking Democrat on the Senate Homeland Security and Governmental Affairs
Committee. With the previously announced retirement of Committee Chair
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Joseph Lieberman (I-CT) and second-ranking Democrat Carl Levin (D-MI)
www.napus.org serving as chair of the Armed Services Committee, Sen. Akaka would have
been next in line to succeed Lieberman, if the Democrats retain their Senate
majority in the 2012 elections. With Akaka’s retirement, Sen. Thomas Carper
(D-DE), who presently chairs the Senate postal subcommittee, would be next
in line. If the GOP regains the majority, Sen. Susan Collins (R-ME) will chair.